Intel (INTC) 26 Oct 232023 Q3 Earnings call transcript

Thank you for standing by, and welcome to Intel Corporation's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Mr. John Pitzer, Corporate Vice President of Investor Relations. Please go ahead.

Jonathan. you, Thank should earnings you are a of copy on By and have earnings QX intc.com. website, release Investor which presentation, the our now, Relations received both available of

both webcast session. the joining those is in brief today and Pat us hear our today, our Zinsner. from window. For moment, earnings CFO, you joined I'm will followed David online also Q&A presentation available CEO, by Gelsinger; a by our In comments a

discussion today's it. does forward-looking we they our begin, references that Before financial that as and see note on to based currently are risks measures to environment investors. contains we And contain the It various please statements such, also believe uncertainties. non-GAAP information subject provide we to as useful

most materially Form could Our They our With with to measures. on recent other filings more on where financial reconciliations, differ SEC that also our risk turn that, financial additional factors on annual appropriate, corresponding me to and from to report the GAAP Pat. results let over our XX-K provide non-GAAP information information things measures expectations. including provide actual earnings cause release,

John, everyone. you, afternoon, Thank good and

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demonstrates across than the our an AI above standout Revenue process operating financial were we and the EPS delivered leadership. from guidance, Intel Simply key the and strategy put, the in both Foundry IDM More towards results. for the power quarter performance high our is bring to reestablishing our outstanding transformation. The to quarter. QX, and important of discipline. We our was this expense everywhere. and beating leverage transistor operational benefited have our X.X strong our made and of end milestones strategy we products, consecutive meaningful Turning third achieved quarter foundation Services performance progress expectations

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greater in achieved of EUV first this underway EUV has tools the began and a High-volume ramping tools XX% month. In when on capital now most initial shipping the aggressively industry, which more Intel with in we we Rapids launched. in than release Emerald product to were began of compared are and addition, on Oregon, fleet QX, EUV shipments In providing Meteor advantage productive well Lake is manufacturing recently, efficiency us Ireland. X,

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every in major of the are region semiconductor scale globe. only at leading-edge the We manufacturer

Our Intel Intel our by be tracking products: X X supporting manufacturing-ready Forest Granite process to year-end, is Rapids. and first Sierra X

fab in be Forest already now. Rapids out the fab, our what Sierra is stepping expect is we stepping and In in taped already of production has and fact, of Granite to of production the

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functionality. XXA imminent to achieve expect on Intel Windows of simple of significant, and XXA, demonstrating readiness invention in already now is In critical RibbonFET XXXX. lead excellent milestone had our We customers. the more industry-leading towards running on product with and the PowerVia first production-ready XXA Arrow technology. complete, and the to Even Lake, half availability Intel release process are we manufacturing the terms, PK of external with on is phase X.X racing we a

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have of compute in benefiting and we announce that performance signed power we silicon from addition, area. with additional are per focused are Both In customers. today X high-performance areas to unit XXA extremely particularly pleased

have before with year-end. negotiations and conclude customer We commercial our progress contract substantial made next are also to major expecting

happy to Finally, foundry expand for by strategic Intel in we and IP partnership X for include external also our with were internal growing foundry and Synopsys both completing ecosystem Intel Intel QX our to customers. very XXA

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we awards by in our AI the During awarded year-end. several for designs advanced additional active with and expect we more negotiations, quarter, customer an X packaging X were customers

$XXX manufacturing an improving in We for in by Tower our established New business with along investing cash expenditures our This important period with utilizing have relationship facility. of this Semiconductor, represents of use foundry utilizing also important a flows roughly manufacturing capital longer Mexico, significantly an strategy, assets step our its million assets over in Tower time.

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semiconductor as AI the the AI by trillion a to key a mission We on are see driver of $X everywhere. workload XXXX. TAM bring We

empowering are applications. AI market and the integrate We to their run in effectively seamlessly all

MLPerf performance, frontier For powerful competitive working accelerators AI parameter the very combination TCO. our of a the Gaudi developer and multitrillion cloud, with cost-efficient a benchmarks provides models in of suite and

inference a shift both AI AI-integrated Core enabling where Xeon the and However, as the a for cloud-based OpenVINO AIPC towards of the support into market range and edge used bringing of nod data world answer rather the forcing there's generated AI accelerated being enterprise, It's and an versatile we developers and Ultra towards launching is for moves generation a than data to inferencing. to local the cloud. and applications, more privacy necessity it silicon, are client cost. With seamless to

to devices revenue positions sequentially. AI servers the all us this well quarter segments. and continuum Our modestly AI expansive forecast cloud volume exceeded clients to server our enterprise enables footprint continuum AI ubiquitous and our spanning enable The up everywhere. DCAI edge with market across

a strong with of general the ramp top Xth in our MNCs. Xeon CSPs from see processor XX Gen to now strength world's continue availability We and improving

and X shipped Xeon month. Xth Xth millionth security are unit networking to surpass performance powerful AI, workloads. Gen During CPU best-in-class our track we units million the and accelerators, includes demonstrating on Gen quarter, for next X Xeon

Xeon primed AI This visible was AI-enhanced quarter AI Xth applications. existing for with X/X of related inferencing, model workloads. shipments into of infusion are directly Xeons seamless over enabling this to Gen Our

provides map industry-leading expected Gen an in AI performance to CPU in Granite We Xx benchmarks are our with the top results X Xth further clear today, to MLCommons and road our seen of as on Rapids improvements deliver additional AI Xeon. leader significant

make to progress continue road map. our We excellent Xeon with

next-generation Xth customers. Granite Forest, Rapids, Sierra price also with will into delivering to 'XX for Our track will and our E-core Emerald processor first customers with December production City. launch well customers in Xeon and first Rapids is ramping York officially Gen to in Xeon is XX on New code-named for into even their performance is cloud-native well cycle our Forest validation Sierra XXX workloads, validation E-cores on which our follows Sierra power feature more targeting process. and up efficiency Forest, customers. shortly half

the seen burn most at last compute exit has in QX off levels, enter signs inventory industry driving quarters, modest normalization sequential TAM XXXX. growth. shifts inventory between some to share returning we as to healthy historical the over we several the the of the see as well depressed expect more market, customers, and and in some we growth cores normal year accelerators rates CPU server Across While we see as wallet

share map and road data well X Gen to product Rapids importantly, More Sierra X successful Granite with strengthening Gen the and win Xeon, in Forest our is back our positioning center. execution portfolio us

addition, capture like Face. led third growing market in leadership suite accelerators XXXX portion benchmark with MLCommons a Hugging expect accelerator our and by with In of which parties results the we Gaudi, setting is AI of to

momentum are particular, and over accelerator our we Gaudi with doubled pipeline are have customer pleased We and the last from our we XX the seeing in nearly days. portfolio

Gaudi Xeon featuring As to with Xeon edge. largest now edge of support from its to world's X,XXX many to deliver Xth AI we systems Intel for AI Gen our the AI and are ranging with is enterprise building are workloads Together growing large-scale to AI inferencing partnering on and supercomputers XXXX, supply we us power accelerators. demand. Dell training having and next-generation like others, on look with entirely meet we accelerators focused cloud Stability.ai, processors customers Gaudi to the enough one at GaudiX

into capabilities on year. with to Shores expected XXXX, and Our and track packaging a our in Gaudi product. GPU next now the single Falcon GaudiX launch fab, in road Gaudi remains map out of And brings

client. the leadership CCG exceeding by strong to Moving are third and in for quarter, gaming consecutive SKUs quarter, driven where consumer the strength expectations delivering delivered another commercial we performance.

of customers year, burn sequential we continue completed the we expect the in their expected, As first growth, into inventory driving which QX. half will solid

Intel power launch design the on returning unit, QX Core feature efficiency PC outlook AIPC the when minus of of TAM We first XXX graphics Advanced compute for expectations Meteor in and the will improved units. expect XX represents full alongside line also ushered with shipping processor neural the expect to Intel Ultra approximately chiplet client in or in to industry plus X, remain to workloads. Lake. enabled as the Foveros for consumption in to units. Intel term, Xeon. on a NPU, processor Xth enables QX PC Built is tailwind, our XXX million released our integrated the customers we we to Windows million on dedicated XXXX first to be It Gen and AI long-term XX continues end-of-service technology, be the processing client weeks has Ultra Intel XD be December officially era and code-named that performance. we year we pioneer a Intel packaging delivering low-power positive Ultra near by several the Core or for The In the been our

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talent participating, deep tools with over XXX software providing bench already We access are Intel's optimization, catalyzing this targeted with of program and opportunities. core engineering ISVs to development acceleration moment AIPC go-to-market our for

and growing AI and partners potential PC NEX encouraged are growth the is by signs of see market. motivated early the benefits from seeing of We also our use competitors who cases. the tremendous

well Our both are with I/O workloads ethnic and high suited for in businesses bandwidth XXXX. data required AI center the to accelerate the expected in to IPU support by growth

our how of the at Additionally, aspect conference. of Intel's developers and deployment edge demonstrating with version they use NEX for time and at OpenVINO AI launched innovation accelerate of AI.io as choice edge, and XXXX.X, inferencing their platforms, client of to the on continuum, run part focus OpenVINO the every applications Match the AI latest Fit on

seen a of developer year. developer leadership this have doubling software have that engagements tool chains We

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track with in nodes We are X on X years.

our product hitting are all We beating road map or milestones.

global ourselves are as foundry systems advanced packaging. and for We processing establishing a at-scale both wafer

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our the continue more we know are with maintain strategy, of While and our go thank by deliver efforts. our that, QX. forward turn we it With provide execution through family to over encouraged our much front to let detail me date, have as in our to to we work us we I'd progress for customers. and like for commitments more guidance relentlessly in personally Dave to momentum drive to Intel their results our all

our and IDM you, another We guidance beat and everyone. strong execution maps financially our on gross good X.X product Thank EPS. to afternoon, revenue, continue delivered Pat, we top on and quarter drive as our transformation. of margin process We road outstanding across

aggressively term. indicators to business, prudently economic expenses and geopolitical health cost structure managing we'll and momentum driving investments, focus to with fundamental monitor and prioritizing to improvements our continue continue our longer we While on near-term pleased of we're and risks, the our and

of million Gross XXX revenue OpEx $XXX and gross the billion inventory. million EPS and was across up margins guidance points all by our cash and guidance, by $X previously in quarter driven $X.XX. Revenue of our expectations for billion, than strength, operating inventory or improving flow the management guidance. sell-through XX.X%, sequentially. above of up X $X.XX, midpoint our was sequential Net better revenue was quarter X% QX reserved sequentially lines major down in $XX.X $X.X margin exceeded was the $X.XX, business. and ASPs EPS days billion, quarter. resulted was growth Third revenue better $XXX disciplined as higher basis our of beating

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decline, billion quarter. DCAI in on units million the a showing ASPs revenue Moving and adoption operating spending the revenue better the of XXX consumption along higher billion, with operating internal of led the sequentially, billion, softness, Favorable record results. ahead of products returned driven profitability TAM MNC unit levels QX. than of revenue $X.X profit are revenue percent reserved business Group DCAI market for $XX reduced by products XX% CCG TAM gaming sequentially seasonal third $X.X the for ASPs, Despite density, quarter. business quarter the ahead Solutions unit doubled charges of core our remains inventory continued and to newer improving was delivered to DCAI, signal Xeon our and to up million, expectations commercial to underload strong for mix, roughly of Despite CCG's revenue, in ASPs XXXX. sequentially sequentially. higher Programmable January our Customer sequential customers track on customer recovery third and consecutive strength $X.X to forecast. healthy, profit Xeon quarter. with continued in stronger up factory inventory on of our sequentially sell-through discipline. Within and contributed with and mid-teens declined was in better

entering the supply, and As of we month, burn. after strong this inventory discussed is period a earlier period tight business FPGA of growth a

operating million Network and to XX% quarters sequentially. NEX as the QX, for be expenses reduced Xx and up operating a expect perform portfolio million and through leading signs $XX spending X% work expect exceed operating outstanding Mobileye elevated to in $XXX returned This few through revenue of telco operating operating XX% IMS million, to demand, $X.X with customers persist depressed on of to the QX XX% at midpoint. QX before cross-company was and focused factory of ], outlook run for up up year-over-year basis, of well. also operating in markets and million sequentially with end Mobileye in X% $XXX work weak profit the recovery $XXX We ramping revenue higher was year growing stronger [ loss normalized another decline million, income year-over-year. revenue period. increased to operating revenue of QX a Foundry XX% revenue IFS continue revenue fiscal in and on and down up expectations. expenses. Intel consolidated continues expenses $XX inventory next stronger more increased was was markets discipline sequentially, management year-over-year on $XXX the and billion, sequentially revenue offset quarter as to through our of by sales year. the XX% showed to tools. and adjusted million which PSG with we packaging profitability QX sequentially. Services Edge and inventory NEX represented returning XXXX their growth. NEX morning, profit rate

in of billion QX track in and higher of reductions OpEx marketing the the measures spending austerity some total temporary taken earlier in to on compensation achieve activities, $X year. higher expect end seasonal XXXX, to we're we due profit-dependent While sequentially

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Now turning to QX guidance.

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billion, resulting XX% in We expect PSG more network in in through margin moderate approximately recovery flow growth continued than midpoint offsetting a approximately persistent of tax of roughly weakness. decline from with with expect Xeon's DCAI, At of strength gross at gross XX% we of edge QX revenue EPS $X.XX. $XX.X rate markets the sequential revenue margin offsetting to a and of growth, XX.X% and

foundry We Smart of we continue the QX, a to and framework. our Capital grant capital In Ohio operate from state prepay. first received under our

prior There Rapids do Intel's quarter QX to we since in significant land we began that and transformation. the quarter was multiple Emerald leadership regaining bottom vast foundry of secured those on though we continue the both our lines. our In our of our net Intel exceeded delivered of that to time, on XXXX XXXX aggregate. frame, with trend in We expect offsets on on another we on changes delivered work XXA, across percent XXXX. In our Commission towards and applications. expectations to and of XX% top capital our time Capital mid-XXs Meteor customers And are range packaging XX% in toward in continue and addition, no Lake expansions of advanced milestones intensity with will results U.S. to majority end and higher the offsets Poland forecast achieved process strongest CHIPS closing, the their and European Office wafer financial the U.S. Europe. Germany, planned to X review work

participating confident IDM investments We and we the and as in long-term will semiconductor committed to significant TAM. financial make strategy, targets. We're remain we growing a execute continue to X.X and our large

the market. cost and make structural We're call AI the we to financial momentum delivering toward returns and in to that and we With foundry turn gaps, steadily our showing great John. expect. assets let progress over the that, owners Our continue me closing are back

Dave. Thank you,

now transition caller? the of call. Jonathan, that, to With can Q&A will to portion go our [Operator we first We our Instructions]

question line of from from first our Arcuri comes the And UBS. Timothy

up Dave, on margin of sort innovation wanted see of if confusion I the just gross some came that event. clear can of to you out the

You're roughly now couple coming out XX.X% year. you basis I you the of think to but is but hundred did at that the XX% said going year be up for year next at And event, a of probably points. not

So off And run us rate year? the year? or QX did the of kind XX% do the that of off throughout you you you of mean for mean the shape can for

from don't spending Yes. just for terms team. the me They you of gross Well, mind, in we margins was just to coming on of which propel I great because if in me bit work QX, back. and a I QX some helped terms margin. reserved proud did in sell were about second and QX also previously talk want the let shy XX%. so really the inventory, a that let really to was team's little performance step execution It the helped, -- able of underloading, through gross of for

through more associated quarter. I'd nodes X muted years. what we that, had back kind we go which the us. is fall-through still by third start going spend typical mutes fourth somewhat be with fall-through would phenomenal in range, say fact the of There our that we X So to in to are of quarter,

of we're guiding a that, of probably that's what normal fourth like we're fall-through, bit in the fall-through. we XX% of, a So it's little normally and but the probably kind terms for range That's quarter. with higher think

We're about to in way. that those get things next 'XX. for around organizations I optimize things we're didn't see to they Suddenly, Pat would to get longer-term between And fab. and lot time stepping, the functions, the product And now around close that. out manufacturing of to but P&L. around around we've the that my hot how And even spend we year that foundry a already When process lot say the X the years. do and Pat to thought look eliminate heart a all times, the starting save model thing about it are see of for margins in gross XX%. lots the we number threshold to as that do ability -- segment commentary products starting would that because we'll built, One, on space, year the care in that execution you at nodes we we rest importantly, before, But we're that, about it officially we've that, are is of improvements see of that that we're talked plan separate to organization improves, report we that launch in where in long-term execution as side. that hit that We'll the this XX% with that a already when of the near course, for we already then already next leader, planning thinking dialogue about reasons. it this But Beyond way a talked in more more just lens. the the already that like in measuring doing P&L the operations as client feel margins. Also confident and competitive turns now. you're basis, they a of reviews. that I we X a through the on just samples do product when margin We're and see starting they because seen test we'll TD margins, next headwind now. year has a lot year tailwind around We on gross that's a on the in to better the in lens. And helps internal the marketplace. gross dear maybe many we're starting also our starting

their front, P&L, On want P&L. a the worried much drive loadings. about as about the worried as most to now they're try can cost the same really, manufacturing, in They revenue really possible. in They're drive down to they

So lot to we that us and really are confidence I 'XX as this we see opportunities XX%. progress going around of and on think will gross that an give a a impact make margins through of just beyond lot

have Tim, quick you a do follow-up?

to I just XXA that allocation major they'll and about time from idea same out that your have at go Pat, of They in be maybe the to is their getting you I that of the partner? foundry do, yes. went that going way what talk your dynamics -- of do, frame. the you're comparable sort kind can to

more So becoming and the progress, from change that them? that a any there relationship getting you're been little now in allocation that apparent are making that it's has you

confident we Yes. what art. performance them. a I'd the XXA. And additional with high-NA, glass, now years as one making all and We we that being And by a with with, that's PowerVia, This as of. is the think last power well reinforced years, you a announced say area we're feel spoke comments, things that say different than from packaging about with we're of and the from in work. We XXA generation this -- the the advanced the EUV me And nodes X that might my in think with earlier, I we're results they're them. customer that and are very great or the positive Intel Three remarkable like set in competitor relationship that backed these expect very And on of about invented leadership commitments, to of on hey, have we work heard now of that been built, we ARM company position one also XXA of that collaborate X up their customer is come relationship you TSMC, one customers, are X customer heard April, we to, as commitments. first, XX formal the our prepay right? things a after partners, hey, said, XXA, And we we as we on now seeing transistor, conclusion that is next X partner a underway track the to customers and This ever the leadership finest is position we've And transistors. a described. And are we we've of feel best right? this that.

nodes As became as raising quarter and of this products of our products how customer investor us they're a we're very happy well. supporting we're you as the of to IMS we're very critical as in relationships this forward critical our And there, it. We're a quarter those, in critical really back in of process them. X in us is the on a And these saw, with confident is years one for industry. most and an many time leadership. to road supplier they I a business supplier as to spent lot personally an to getting X exceptional map. the This

would. what doing to well are way we our said on we exactly We

And Bank. Deutsche our next Seymore line Ross question comes from from the of

the and And the ARM? ARM traction, using PCs xXX using architecture CPU what up of is one follow competitive people wanted of fact, ARM. talk you Pat, reports your things. that to entering center technology for data recently broaden your I been of a of business internally? over topics years to of about on in was you landscape potentially, about seen consider number the last architectures that couple versus just with partnership there's would side gaining just The ARM side the kind you more we've of importantly, the mentioned on of Can if similar of flip

at excitement Conference And couple AIPC competitors Thank our the and our And I that history take Innovation Yes. ago, I seeing we competition seriously. Windows alternatives, declared in think guide what think Ross. overall, here, excited relegated AIPC. to significant a is don't all customers, all they've the you're we're potentially see seeing is And insignificant generally, But materialize of this overall. of around that. seeing you, months and client I roles business. ARM as we the industry been generation as pretty these PC being around that

momentum strong. Our is

next-generation This market XXX marketplace. our into thinking Lunar we referenced business." we opportunity road Lake, extraordinary significant and foundry ecosystem product unique that QX the Lake, this X to has We'll the over foundry for which we of see have part PCs at of XXA. in an very given in volume. in the that, years ARM now xXX generation may Lake, success that next which the ecosystem great AI-enhanced marketplace. When as opportunity packaging results ARM, with we We signing we and the Intel -- Lunar has and ecosystem strong also becoming, the expect be improvements demonstrated million of an a AI capabilities our the have wafer a XXA architectures are before, in Lake benefits ISVs over whatever generation full next And think, Lake, the I map, segments in Acceleration have accelerant launching which as that XXX the brings is program, AIPC in million Meteor The offerings, well. like it. We foundry already about just other participate to performance the we've alternative Panther We'll be ARM that "Wow, our announced as XX. capabilities. our amount or fab December Arrow already around significant a say, what

Ross, do follow-up? quick a you have

do. of did I OpEx great Dave. guys The quarter. Yes, the side third for things, you in One

You as on have know cost the just OpEx $XX the How this to are takes it term. you is had puts still you what in I billion originally year's I ahead think about you're but we the targeted. going billion total longer and think $X talked savings going look to about said $X fourth next of year conceptually? quarter, XXXX? OpEx in billion into year, do we full up What

Yes.

them say could lot dramatically execute thought So quarter really able in that spending. And did spend to And and again, done that, I and really we also reduction. XX of areas value. we the see associated that back we've to to work -- X unlock kind as most of product looked what out divested effort or that. year on in importantly, third the addition at lot either the we been an thing, to businesses where or we've proud took value. we with closed the for that pride I'm we what talked in of There we obviously, as We our was about, But we improve of, we of them drive had a likely more or think Pat efficiency. we areas a and to programs unlock of thought -- would end

pretty I from the we So activities we're think perspective, with done that feel associated with spending.

-- also think so the internal OpEx foundry on but benefit said, model cost do the that And are we'll side we side. from our on not see only we

in we'll the spending. And the terms managing long to but that the get XX% area over goal margins is to of it's focus to that's so operating XX% ultimately, term to And get gross also margins.

of we in the entail the OpEx quarter opportunity. close margins. that gross the I same we -- or save and for that said So 'XX. out does We'll 'XX there's plenty on 'XX say driving think thing on OpEx when visibility fourth I'd efficiency

And Moore our of next comes Morgan question Stanley. line from Joe the from

training bit, I think billion you the to kind of in of Gaudi talk versus Can that there. how XX you the of much is about last guess I so a visibility pipeline talked little nearing days, doubling you're $X that inference?

a business a going When will just Gaudi models, thank side few of a but of the people we're in and lot coming for of say people this see expanding us, workload, rapidly. to opportunities small be we think them. And a you. there's which We the inferencing opportunities. the I'd training generate of inferencing surge -- use Yes, mix base expansion lot we overall, it's category, significant a the forward, Joe. go do of from interest workload In a

we how training do weather weather about inferencing. like many. models? A Not people and think how that's lot. many of people How modeling? Sort many use And

Gaudi of a the power, And spoke with about, point or bringing together And will where those workloads would AI-enhanced a of I play. inferencing inference, play. training will in farms the for where both well to a give Gaudi a as really full example be to of instance, our market will as portfolio see we us Xeons they the play Xeon So the existing to for that more deployments. Dell both adding as be be inferencing inference creating will that be where as strong well for

statement. worldwide is seen Gaudi the in Now we've a that interest

really client also AI also well. said seeing So sort as that play, as we portfolio the this and But this a on-ramp have the that silicon fast say, my Intel formal amount which and also offerings. I balance Joe, is of comments, huge the in all is matches I'd an advanced our where everywhere the cloud to demand AI edge all Intel of geographies. of in provides We're upsurge across

a as So large And very data see AI across as all unique going to gives elements that is well this view a we edge, us drive Intel to client, center it this as for continuum upside that workload AI of a the cloud. think of position on-premise capabilities is we computing. opportunity

follow-up? a have you do Joe,

I Yes, do.

other from In impact Intel's from And broadly, anticipate controls that export business, any any terms of China do business? controls? the are export there you Gaudi impacts on the China more

And do Yes. that. in I think a Thanks, lot interest Joe. of there's

them the at controls, on export you high-end them, the they as accelerator, aimed. at and are where training and high-end look the On these read accelerators much they're very aimed

we question, our in activities us for the well in some first said, Gaudi a of on demand your for we supply saw now obviously, up Now that supply as also, that part worldwide. China. And racing to of we're worldwide to overall, But was there. I and constrained catch as

accelerators Of BIS. BIS We're place, -- that around We're the so around with course, new the broadly continuing BIS with of them. in China XX-day we'll work do we regulations and have we're period we're AI studying plenty comply and actively our particularly released products working in the carefully. as rules with specifically comment those We in BIS with there working training. they're high-end even that opportunity to deploy putting believe

about guidance our included the engaging customers, momentum our fourth and the for of overall, map we and build So into our as the road and good AI have we be we course, with for of that overall consideration. as that part we'll, feel We of feel out that quarter. taking all governments have everywhere,

Reitzes And from comes from the of Research. question our next Melius line Ben

Pat, if comments. your foundry unpack was could the on you Congrats quarter. wondering I

about, where prepays. known that there's customer the we've You have

think quarter. about talk coming you're well. and there's a to customers another flow first see you the little into in to that's you how there's and going the up could just mentioned if give I materiality more wanted signing as event year-end, an years detail I and that X by and then through more us the

Yes. that unpack Thanks, Ben. Happy a more. little bit to

is But the So very go that Deutsche now year, Bank since That that. At we I so customers we beginning with also time, committed Intel back our the for added relationship had continued well customer customer. this to of expanding at external the first X. that you prepay promised quarter we and XXA. customers point announced has the in well, that have conference X effort on major we X more as

milestone. XXA, in at X.X are to we with PDK the we I if PDK the you're fourth quarter, Here really the least X, of inside hope is milestone, and the of this year. Also third finish have before the critical hitting end a industry, and

phase we're getting manufacturing. productization invention in for ramping the is And refining comments, when now formal this my said I phase, capabilities As ready process into is the and the done. performance yields,

to of fanning can customers, that them a lot industry. the at we out XXA, and have we also the as now milestone So we say engagements external start in that which now looking we a start critical release

quite interest quarter, this So advanced unexpected and saw X which in we amount the huge XXA. But AI realize. this surge Intel's And probably the Intel's the seen. a this industry, the best we that even that packaging technology. for critical in milestone that bit a we've packaging was interest was on little We other customers was that didn't thing the is always knew but of technology

hundreds with three as the of customers, packaging. the that A I we're dollar X active right, additional customer years we to materialize. well. And have millions a X dollars. customers the quarters completed think to of of customers that X customers, And to and additional as so And customer. fast materialize, X is Services. negotiations to pipeline takes about packaging X to in wafer wafer customer's billion packaging additional X in a multiple dollars takes Intel customers, The we X this packaging wafer So XXA Foundry billions on-ramp

to So of those This really momentum for to to of is seeing year. And customers was the that business, foundry super Services now this for Foundry out for industry Intel. going Synopsys this has amount build you agreement, way business. the the add a in to Tower really faster was momentum, start begun Intel much the great and see that points the with to It And up next across materialize the putting the happy for us that now business. the board packaging that for ARM we're business. across revenue flywheel quarter start us is the energy foundry we're for partnership, a at

Ben, do have follow-up? you a

Yes.

gears Going to comments to switch PCs, there. your

normalizing. It about are next have XXX inventory like in comments the inventories just just some do hear Are matching you the You've do out that. detail you million, confidence talked I playing to wanted that. to you on you -- year? that how on wanted see little builds a confidence your will bit demand? that so And TAM back grow sounds more think

business the we've for quarters Yes. Three row, a very us. seen in now client healthy being

inventory levels customers' regard. very are healthy in Our that

by being a sell-in sellout our those for see matched customers. we So

really are As say good. And said, I'd indicated now XXX play we something here weeks X the the that seeing into we're and we TAM looking in consumption we out and is exactly. quarter million earlier year, it's the

client AIPC think the our multiyear very So our will ushering idea we healthy views this and generation be business fourth for quarter. And a in the do cycle. forecasts of is of

starting category the in So will Core with bring this launch we excitement do QX. the Ultra or Lake even Meteor the into think

incremental quarter. tailwinds up Copilot coming launch also We some this Microsoft have with from other

We Arrow Lake coming is and great. are with it. Lunar that Those our Lake just what road ramping have rapidly more tailwinds us in looking XX Meteor Lake just also the Panther and up. incremental finally, have then And the support map Win Lake we confidence end-of-service in future. good, build And coming

and opportunity business tomorrow. this aspect is of great demonstrating for momentum maturity, health, every So

for was see just we balanced inventory that's really of out. the the what's and X out quarter, it's start of kind and good to steady really, I'd the you're And good other fourth third kind you the really when across linearity track shipment quarter, you of generally, shipping off just quarter. sign shipments, thing. When a the really linearity entire in a add good in that really shipping

question next from BMO. our Ambrish from And of Srivastava the line comes

is that if ASPs think, either pressure Dave, the This I but for correct, come to Dave. wanted Pat DCAI. In PowerPoint, for I competitive to back heard mentioned or the you said you just competitive I you just was side? because record. was or to lower, Could the meant would explain a its being by pressure you on impact led what have thought unit ASPs I would have you were

couple of there. to Yes, and there's unpack a things

based on of we expected thought that just said, through we from would even market Just did competitive quarter, have was our losses last we we lost rolling views would That that the are than some year share. our we in a bit customers. quarter. That better the

ASP count We higher core versions, that rapidly also has drives are up would the ramping which Sapphire aggressively. than as have Rapids, ASP more higher go the expected we socket a more we to per

much as we which that which X, the drive pressures. for as combining Sapphire core overall, So issues Rapids, will for we're But road feel and higher Granite working counts, ago. Gen ASPs we're Rapids, Sierra that also began definitely higher have say, Emerald And years with Forest I Rapids well. map those competitive

trajectory feel do business on for like overall. together, we of So we're the very put all that solid a

we road here back come the We are And that I feel Intel will will forward feel forward. map to rise. and that starting see is as to competitiveness them a to looking offer ASPs and to our go stronger market and our to businesses. map the very customers continue like The business healthy benefits their road

do Ambrish, a question? you have follow-up

have what's can the help to can't model the years, size and you coming showing just several operating and in XX-XX that last were are pretty you just think parameters steady Dave not say around long-term I business? Because what seen that gross way the to even But the haven't that you an revenue, IFS did. Intel follow-up. which talking to terms have execution the back business I a the But about we I that of us that. about, margin. to mix potentially in margin, would be mix of of dilutive right the business? understand will

margins improve going the say about, around the I of products definitive the the to significantly, think have improving be across I'd getting to product gross Yes. process the getting we to kind road leadership was Pat as and leadership all map talking to thing where getting ourselves is finally first to -- completely, products.

front. And all internal this low-hanging those on think significant also I kind fruit I the X products the at, the gross of Yes, significant the I business, business almost when range there's things that anything them, in lift the model, that think impact below internal we so talked weight else meaningfully have But business, time. side, just are margins can both margins. we different have gross are on look will a then have mix that the and as wide does of foundry now. on manufacturing there's drive punching that them And on irrespective lift we a business much of the about have on as all I should of cost of in units will their foundry gross improvement TD margins, over an we make margins. right improve and

Wells from next And Aaron from our line of Fargo. Rakers question comes the

trying expansion the ASP going that the at might about about kind normalizing I'm the the prior And in that execution Data segment. on and think just question, of about Center are the segment. DCAI this operating you back in also Kind over guys quarter. to like guys of I out what you path look of How do look the profitability look trajectory the time? profit that the how in congrats quarter. thinking profitable about I -- just understand as in you turned know think thinking of to

portfolio goals written they of I'll at to Maybe I's start. peers sheet should a CPU that to make profitability investments I of you said, Pat making right the a business this return improve have side healthy to quarter. That in. see it That we margins term margins. when was very and wanted the see think, feel levels the from front. to that Pat, paper of pretty investments on to us operating of AI it's necessary this on chime show profitability. this to one But important similar free product lot Yes. was, for business are the longer are and its now margins on Obviously,

there clear. component we the have And a to is the drive of of do course, that lot will of ASPs path a I longer get so improve lot but work of efficiencies can that that term. beyond pretty but to will And there's margins think you be just ASP a

we a back as for business. capacity network more emphasize factory foundry capacity, build businesses Yes. product overall, improves build well. little and our across client Networking Center, that margin think bit the Client, be more being some up. I'd the like we driving And tide of where but of the lot and just Data process that a and as think about external about customers. because model below us that expansion our And I we businesses business competitiveness get the not might of build we're we as taken lifts as Center we potential and that's that foundry That's our together, that. all But boats it also term, leadership driving we above as to we're Dave for see our the and it, Foundry in profitability to business a the the internal profitability how said, Data that the XX-XX for volume-oriented long

important a financial this me overall. which like feel quarter this us not great to results an overall, milestone say, is this the what seeing led than but is just were hey, for that, we really results outstanding operational better even us for So quarter, was

a have you quick do Aaron, follow-up?

detail and do, Yes, the there. thanks for I

the As this say was, was with the underload like margin you about the million how a a Dave, to factory It impact it are quarter. XXX-or-so underload thinking reversal kind margin. of reserve just of inventory gross that gross want or gross margin [ ] margin factory what embedded think know done it line. last quarter, about gross you sounds I that curious, quick was number? And Are I'm I had in follow-up, we thinking I guide? and in

bit improve we said, kind But That it, of quarter. was with improvement it in underload fourth the a the in mean, a we'll dealing of does this loadings before the quarter. call beyond quarter. I the that the the Yes. as benefit, underload underload meaningful wafers reasonable through because still we'll kind cost and and in still underload has progress, on done. completely get to in improve will flushed part of probably hangover, charges a underload while inventory, of all was we're That tied largely in a basis, there that still in we next through be amount year up quarterly of of I'd have the kind probably charges all get

chop completely to clean the improvement. to still but out underload. have we're some So -- year woods through largely we're we next where meaningful of wood say I'd in

for I time think X have we caller. last

final from question of Ramsay And our TD comes today line Matt the Cowen. for from

wanted I your all about in Dave start, I Intel we're and the all folks to Israel. Pat, bit, say a folks, Before just thinking

those could And size update really lot be on? you'll a and there what that of gone output your operations the what detail the so little the are, going they're are just of fabs of an peers, fabs give these competitors need Any would a do actually I on, of reference that it, there nodes given of that. guys atrocities Maybe operationally, maybe kind bit you take how wafer helpful. of question have this in I Israel. have to ask Unlike guess, and to us you

now, of the as performing And I the These the friends that resilience that They're in Intel appreciate missing as commitment. the said, hey, single remarkable. in extremely This almost XX years And well. consider a of these not I earliest Israel all people deeply. That challenges, Yes. of well. is we're they're we'll team one despite country, personally Intel companies are say is team.

the factory the uniquely have chain and there deliver to drive Israel. factory is a the on we Intel's to of have that in products there. That is that the operations of running continuing multi-geo we they're X that in continue and Intel said, industry working We our factory one supply expansions And benefits resilient.

flexibility we have of the run Israel X that we resilience that X. the highly all assured, for locations of Intel continue we're in to confident the as supply the we're making products assure also other to what Middle We customers be that sure of also a Intel resilience those deliver confident team have that our very of We're that our have you East, of all core we positioned model we are even across across gives Americas, capabilities atrocities, may for have to issue our Asia, despite our so and continued chain in can perform supply to well Europe, us business our in operation that operations. we regardless globe

follow-up? quick a have you do Matt,

Yes, do. I

I've one is the about I swing growth killed don't phrasing getting there think do. And question that's gen in a of And out star infrastructure. follow-up, keep been AI guess there's of way is, I is the to but towards data my it the CapEx kind that happened ton right? As the some the asked that to things CPU the of be radio clear, question, video death I center? Is the the this

data or made CPU return and on perspective. answers some from Maybe about comments few support a growth might you to script you then Pat, other center that. antidotes your So some can normalcy points in day give a that

it future. a is on AI-ification that leadership accelerators, those Xeons applications. or Where given do that been use the we their Yes. into that of of these they cloud AI performance on of a going the but run existing to And part put huge models space? run, the will some interest amount for on put of is we has, inferencing that those put on deployment out map. better, And we where bias guys, Granite deliver in that there's bring right, for to power over models -- do quarters, Rapids, the spectacular truly road environments budgets, of models, the of is applications said to the which And largely particular, in applications, X will couple as It right? gets large think their training as system is into better Gen And the floor that further the what they that's race the as been when but the have of gets of Gen driving better with surge in largest AI of they I Xx I even those X X. said, comments. a And place. That gets do go clearly can a interesting, we believe for the in driven our gen AI, we

for in very So of for the on Lots more on a us OEMs exactly AI on our inferencing as Dell very The the we're line, businesses. we very coming at Xeon map product we behavior. forward. both across combination seeing, normalcy of announce go DevCloud. Deloitte ability as quarter saw healthy. I'll for in just good scale seeing and embrace as The think, what this heard development road cases and do optimization Xeon that as profound is is Xeon announcements Gaudi that map. road of customers uptick it us to We from Xeons, Gaudi. Key their also AI is use we our you as on on buying our Xeon seeing partnering the with And application our like ecosystem well they're their had We're platform. they're say,

go And Intel So we accelerators. everywhere. that ways. into growth much of AI feel and the the will scale overall, be said cycle cloud, as That for be we led discussion capacities the center is done inferencing AI topic will in comfortable to we're this that as as part be in but industry in is at in be at in we going Xeons. those Xeon And both going what in there done meaningful AI to CPUs AI is the and participating a is that data on AI well edge, at the will 'XX. the by pretty of client, of be

and the all to by questions, We our affected your momentum update I thank Israel us in just Again, that. in those opportunity we events. that, we're you the you resilient the are that for to joining So want respond to and answer again team your appreciate excited in for region important, Intel seeing. interest Most the our call let's want you, joining thank to thoughts Intel. today for on are with recent for us. of reiterate by I also

strategy, Intel I Rapids Core York The results and in join hope that Emerald Ultra of care our X, Good world to Foundry December. you us everywhere good also our Day. launch As operational the of QX Thank safe. hope afternoon, I you'd truly everywhere, for Lake, to confirmation of Gen of this a our New we said, financial Take Meteor our our night great. nodes And the at be X do in And see outstanding AI results do foundry were it's in And quarter. strategy. you're were wherever you. be. all able

gentlemen, your ladies and participation the does This conclude you, program. Thank in for conference. today's

disconnect. You day. Good may now